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R&D Related Faq’s

Most Popular Questions

AYou can claim R&D tax relief if an R&D project seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty.

AProfitable SME companies will benefit on average by receiving tax credits on enhanced costs of 130%. If your company is loss making, you receive a more generous enhancement of 230%. A general rule of thumb is you receive 33p for every £1 you spend on eligible projects.

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To be classed as an SME for research and development (R&D) tax credit purposes you must have fewer than 500 staff, and either:

  • A turnover of no more than €100 million; or
  • Gross assets of no more than €86 million.

If your staff headcount is lower than 500, but you exceed both the turnover and gross asset thresholds, you will be classed as a large company for R&D tax credit purposes.

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There are different types of expenditure that count towards an R&D tax credit claim:

  • Staff costs
  • Software
  • Consumables
  • Externally provided workers
  • Utilities
  • Subcontractor costs

You cannot claim for rent, dividends, patent costs and equipment expenditure.

AHow far back can I claim R&D tax credits? The research and development (R&Dtax credit claim time limit is two years from the end of your accounting period. Before this period ends you must submit an (R&Dtax credit claim for any qualifying expenditure that you’ve identified during that period.

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HMRC aims to process research and development (R&D) tax credit claims for SMEs within 28 days. However, the length of time it takes for HMRC to review an R&D tax credit claim will depend on the complexity of your structure and accounts, as well as the nature of the claim itself. It may also depend on what time of year your claim is submitted.

AThe technical documentation in a research and development (R&D) tax credit claim should provide a compelling demonstration of the technological innovation(s) that your company has sought, the challenges you faced, the resources used, and the outcomes achieved. 

AIt is important that you choose the right adviser to ensure that your claims are robust, maximized, and that your time is well spent during the claim preparation. If you already have a research and development (R&D) tax credit provider and want to switch, you should first consult your contract. If it includes a contractual lock-in which has expired, you’re free to switch – all you need to do is notify your previous consultants. 

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